NAIROBI, Kenya, Nov 3 – Equity Group continued to show resilience amidst banking regulation and sector turbulence.
The firm recorded an 18 percent improvement from the previous year to post a Sh15 billion net profit for the 9 months ending 30th September.
The bank took a hit with its Southern Sudan operations scaled down to ‘maintenance’ level. However, the group reaped benefits from its other regional subsidiaries.
Equity Bank Kenya saw its profits grew by 20 percent while the profit before tax in Uganda and Democratic of Congo grew by 130 percent and 16 percent respectively.
Dr. James Mwangi, Equity Group CEO attributed the performance by the group to innovation and efficiency focus which resulted to the Group’s cost income ratio declining from 53 percent to 49 percent.
“This (results) stands out to be our best nine-month performance in the history of the bank. The biggest driver of this performance is customer growth which now stands at 11 million customers. The second factor is reward for innovation. We have been very innovative especially with Equitel,” said Mwangi.
In the same period, net interest income grew by 26 percent to Sh32.3 billion up from Sh25.6 billion while total costs increased by 13 percent to Sh27.4 billion up from Sh24.2 billion.
However, the group’s nonperforming loans hit Sh13 billion in the same period a 51 per cent rise compared to Sh9 billion same period last year.
Analysts from Standard Investment Bank expect the bank to be negatively affected by the new interest rate cap law.
“We expect Equity Group to record notable NIM erosion owing to its loan book structure – mainly exposed to SME, Micro and Personal loan assets,” said SIB.
However, the bank’s CEO said an analysis for the month of October showed there was a higher demand for government securities which could be indicative of government out crowding the private sector for credit in the short to mid-term.
“Each bank will be affected differently depending on structure and balance sheet,” clarified Mwangi on the impact of the interest rate law.
Equity may also have been a net beneficiary of the volatility in the banking sector attributed to the failure of 3 banks in the recent past
The Kenyan arm saw deposits grow by 22 percent to Sh48 billion contributing 80 percent of total deposits to the group.
Meanwhile, Equitel grew its transactions by 142 percent to reach 15.8 million transactions during the period handling more transactions than the aggregated transactions processed by branches.